Compliance November 19, 2008

SEC To Require Mutual Fund Summaries

The Securities and Exchange Commission (SEC) on Wednesday voted unanimously to improve mutual fund disclosure by requiring funds to provide investors a concise summary in plain English.
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The summary would appear at the front of a fund’s prospectus and contain key information investors need to make informed investment decisions, according to an SEC news release. The Commission also approved amendments to encourage funds to make greater use of the Internet.

Specifically, the SEC adopted amendments to Form N-1A, the registration form for mutual funds, to require that every mutual fund include key information at the front of its statutory prospectus about the fund’s investment objectives and strategies, risks, and costs. The summary will also include brief information regarding investment advisers and portfolio managers, purchase and sale procedures, tax consequences, and financial intermediary compensation.

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Funds will be required to provide the summary information in plain English and in a standardized order.

In addition, a new rule permits sending a summary prospectus to satisfy prospectus delivery requirements provided that the mutual fund’s summary prospectus, statutory prospectus, and other specified information are available online. The summary prospectus must have the same information in the same order as the summary at the front of the statutory prospectus.

Provisions of this new rule, according to the press release, include:

  • The online materials must be in a user-friendly format that permits investors and other users to move back and forth between the summary prospectus and the statutory prospectus—allowing investors and others to efficiently access particular information that is of interest to them.
  • Investors have to be able to download and retain an electronic version of the information.
  • The statutory prospectus and other information must be provided in paper or by e-mail upon request so investors can choose the format in which they receive more detailed information.

The SEC said it will post the full text of the new disclosure requirements to its Web site as soon as possible.

Deals & People November 19, 2008

Fidelity Names Durbin President of Wealth Services

Fidelity Investments today named Michael Durbin as president of Fidelity Institutional Wealth Services, provider of trading, custody, and brokerage services to registered investment advisers (RIAs).
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Durbin succeeds John “Jack’ Callahan, who has taken a new senior position with Fidelity Personal and Workplace Investing, according to a press release.

Durbin joins Fidelity after 18 years with Morgan Stanley, most recently as COO of the National Sales Division of its Global Wealth Management Group. In this role, he was responsible for marketing, business development, field sales, infrastructure prioritization, and investment strategy for Morgan Stanley’s 8,000 financial advisers across the U.S.

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Durbin will assume his new position in early 2009 and report to Michael Clark, president of Fidelity Institutional Products Group. In addition to providing services to RIAs, Fidelity Institutional Wealth Services also provides services to trust institutions and third-party administrators with assets over $335 billion.

“Mike will lead a talented management team that will continue its focus on delivering advisers the industry-leading technology, product and service solutions they need to position themselves for long-term success,’ Clark said.

Prior to his current role, Durbin held numerous senior leadership positions over 18 years with Morgan Stanley. He was head of Capital Markets in the company’s Global Wealth Management Group, head of International Private Wealth Management, and chief strategic and risk officer for the Global Individual Investor Group. Durbin joined the firm in investment banking, where he oversaw the origination, structuring, and marketing of packaged investments for private client distribution.

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